Nonprofit sector in need of qualified leaders amidst change

It is clear that current nonprofit leaders are not satisfied and recognize there is a gap. Folks realize there is a problem.—Preeta Nayak

Dena Reynolds faced a precarious situation. After climbing a tree, the 38-year-old woman was high above the ground and had to balance with a partner across a rope to complete her challenge. She was also relying on others waiting down below to help if she fell.

"It was really scary, and everyone was nervous," Reynolds said. "You pretty much had to put all your trust in your classmates."

Reynolds completed the challenge, with the help of her peers, and now looks back on that experience in Richmond, Va., as one of the first steps in her development as a leader working with nonprofit organizations.

A lack of trained and qualified leaders in the nonprofit sector is a major concern for organizations, according to a recent study by the Bridgespan group. The study found that only 6 percent of nonprofit leaders "strongly agreed" that they were highly effective in developing a strong leadership pipeline. The nonprofit sector is both expanding and experiencing rapid change, experts say, increasing the demand for leaders and their skills.

"It is clear that current nonprofit leaders are not satisfied and recognize there is a gap," study coauthor Preeta Nayak said. "Folks realize there is a problem,"

Nayak said trends show the nonprofit sector is increasingly important, and "the presence of strong leaders in the sector is going to be a defining characteristic of success."

Need for leaders

"There is a big need for leadership training and development," Reynolds said. "Leadership programs create more opportunities for collaboration among nonprofits, which is important also."

The demand for leaders is so high that a doctoral student and research assistant at the new Center of Philanthropy at Indiana University said he receives offers to teach nonprofit management and philanthropy nearly every week. Students like Van Evans also gets job offers.

"The demand is high enough already that some universities and colleges advertise that they are willing to hire us as ABD — all but dissertation — even before we actually graduate," Evans said. "There is a sense of urgency and almost desperation in some areas to get people with philanthropy and management skills."

Not having quality leaders in the sector is a problem for several reasons, he said.

"Sometimes all of a sudden people can become the executives of a nonprofit when they have no training at all. That can undermine the credibility of the sector as it tends to depress the professionalism of the sector. People need to be educated about the legalities of forming a nonprofit."

Still, it's important to distinguish between large businesslike nonprofit organizations and smaller, grass-roots initiatives, said Lenore Ealy, executive director of the Philanthropic Enterprise. The nonprofit sector does need trained and qualified leaders, but a lack of formal training or management knowledge should not discourage someone from volunteering or spearheading a grass-roots initiative.

"Yes, nonprofit leaders do need some management training and they need to understand how to run an organization," she said. "But a lot of people can rise up through grass-roots organizations and provide volunteer activity that doesn't necessarily require management training."

The nonprofit sector could also benefit if the purposes and definitions of leaders and leadership were re-evaluated, Ealy said.

"We come to overrely on professionals," she said. "Leadership means seeing a problem and trying to solve it by being able to bring the right resources together."

Whether leaders find themselves managing a large, complex organization or a smaller volunteer-based program, experts agree the sector will continue to expand and the demand for strong leadership will grow.

Nayak said her study identified problems in nonprofit organizations that affect leaders across the nonprofit spectrum, most of whom reported being dissatisfied.

"The most frequent answers were time, money and resource constraint," Nayak said. "We also found that organizations considered leadership development too late."

Change in the sector

Evans, Ealy and Reynolds are involved with the nonprofit sector at a time of flux, where the demand for young, qualified leaders is increasing every year as evidenced by the creation of a new school of philanthropy at Indiana University.

Some of the biggest changes affecting the sector are the transition from private foundations to community foundations and the idea that geographical boundaries are virtually eliminated with the expansion of the Internet, Evans said.

"In the Internet era, people are not aligned to a single cause in the local community," Evans said. "People's devotions are not necessarily geographic anymore."

The way in which people volunteer is also changing, Evans said, and this presents an organizational challenge for the sector.

"People now tend to hop around from cause to cause, and that is one reason why we need trained professionals to manage volunteer staff. Gone is the yesteryear where Mom and Pop volunteer at the same hospital for 30 years."

Other changes in the sector include the ways in which the baby boomer generation wishes to spend its time and money, as well a changing of the guard as experienced professionals step down.

"The nonprofit sector has professionalized in the past two decades, and given the trillions in inherited wealth that is being transferred to the aging baby boomer generation, there stands an urgent need for qualified leaders," Evans said. "This is because the sector is both expanding while the current leaders are retiring."

The future funding and financial implications of the sector are also changing, experts say, so leaders must be prepared to adapt and deal with new hurdles.

"There is another shift happening in the sector, as I believe federated funding sources, such as United Way, are going the way of the dodo," Evans said. "They are going to be replaced in the upcoming years by community foundations with donor-advised funds."

Solutions

New philanthropy programs at universities and leadership development programs are trying to address the growing need for the kind of qualified leaders the nonprofit sector needs to effectively adapt to these changes.

Reynolds found herself up that tree while participating in the Emerging Nonprofit Leaders Program run by Nonprofit Learning Point. The organization is one of several that provides leadership training for those looking to enhance their careers in the nonprofit sector.

Another solution, Nayak said, would include having the few organizations that are excelling in leadership development act as a model for the rest of the nonprofit sector.

"We identified nonprofits that are making movement and making progress," Nayak said. "Organizations that are doing well make leadership development a part of their everyday business and continuously maintain a vision for what future needs might be."

The Bridgespan study asked more than 225 nonprofit leaders to evaluate leadership development practices within their own organizations. Bridgespan released a guide, which will be updated with new data and re-released in paperback this fall, to help nonprofit leaders identify strengths and weaknesses in their leadership development.

The Bridgespan group provides five areas of emphasis that current and future leaders can use as guidelines to build a culture that supports development. Bridgespan suggests organizations should engage senior leaders, understand future needs, develop future leaders, hire leaders externally as needed and monitor and improve practices.

Importance of training

Reynolds said the knowledge, networking and personal growth she gained from her leadership program at Nonprofit Learning Point have been invaluable.

"It encouraged me to take on new challenges and helped me with starting my own nonprofit consulting business," she said. "It has been wonderful."

One of the most beneficial aspects of Reynold's training was hearing nonprofit CEOs talk about their experiences. She also appreciated the opportunity for self-exploration and evaluation.

"It was a great chance to learn about leadership skills and identify my strengths and weaknesses," Reynolds said. "It was really eye-opening to take assessments and see how I could grow and improve."

One of the most important things current leaders can do is to understand the true potential of their employees and not underestimate their skills or abilities, Nayak said.

"It's not just looking at how they are performing day-to-day but looking at what they want to do and what their strengths are," she said. "It sends a clear message that leaders who are there now care about development, and that is incredibly powerful for people at all levels."

That was another key takeaway for Reynolds, who said her leadership development program also instilled a confidence in her and encouraged her to strive for her maximum capability.

"I realized that I could take on new challenges," Reynolds said. "I was put on a new path where I felt challenged and I felt like I was growing."